C-93/83

JUDGMENT OF 23. 2. 1984 — CASE 93/83

operation. Activities altering the pres- 3. Article 5 of Regulation No 802/68 entation of a product for the purposes must be interpreted as meaning that of its use, but which do not bring the processing of the meat derived about a significant qualitative change from beef quarters by boning, in its properties, are not of such a trimming, drawing the sinews, cutting nature as to determine the origin of into pieces and vacuum-packing does the said product. not confer upon the meat the origin of the country in which those operations are carried out.

In Case 93/83

REFERENCE to the Court of Justice under Article 177 of the EEC Treaty by the Finanzgericht [Finance Court] Düsseldorf for a preliminary ruling in the proceedings pending before that court between

ZENTRALGENOSSENSCHAFT DES FLEISCHERGEWERBES E.G. (ZENTRAG), Frankfurt- am-Main,

and

ZENTRAG ν HAUPTZOLLAMT BOCHUM

JUDGMENT

Facts and Issues

The facts of the case, the course of the justified was performed, having been procedure and the observations sub­ carried out in an undertaking equipped mitted pursuant to Article 20 of the for the purpose, and resulting in the Protocol on the Statute of the Court of manufacture of a new product or Justice of the EEC may be summarized representing an important stage of manu­ as follows: facture."

JUDGMENT OF 23. 2. 1984 — CASE 93/83

In therefore charged levies in accordance the context of Article 5 of Regulation with the special rate applicable for No 802/68 the origin of a product may Austria. be defined on the basis of a technical description or an economic assessment (percentage-increase-in-value rule) or a The Hauptzollamt subsequently es- combination of the two. In the pro- tablished that the imported meat did not duction of meat the following activities originate from animals slaughtered in may be given a technical description: the Austria but had been purchased as beef raising and fattening of animals; the quarters in Hungary by Zentrag's slaughter of animals and the processes of supplier who, while it was still subject to eviscerating, skinning, cutting in two and customs control, had it boned, trimmed chilling which are directly connected and the sinews drawn, cut in pieces and with it; the further processing of the vacuum-packed in a processing plant in meat, such as boning, trimming, drawing

Moreover, there 2. Zentrag instituted proceedings is also a difference in the treatment of against that notice of assessment before meat on importation (imposition of a the Finanzgericht [Finance Court] levy) and on exportation (grant of a Düsseldorf. It also applied for a refund) since, in the case of Regulation suspension of the operation of the (EEC) No 885/68 of the Council of 28 contested decision on the ground that June 1968 laying down general rules for there were serious doubts as to its granting refunds on beef and veal and legality since the processing of the meat criteria for fixing the amount of such in Austria was an operation determining refunds (Official Journal, English Special its origin for the purposes of Article 5 of Edition 1968 (I), p. 237), no im- Regulation No 802/68. plementing regulation corresponding to Regulation No 964/71 has been adopted. In the view of the Finanzgericht Düsseldorf, the decision in the case depends on ; "the validity of Article 1 of If Article 1 of Regulation N o 964/71 is Regulation No 964/71 of the Com- invalid, a further question which arises, mission and on the interpretation of in the opinion of the Finanzgericht

Accordingly, by order of 20 April 1983, the Finanzgericht Düsseldorf stayed the proceedings and referred to the Court of II — W r i t t e n o b s e r v a t i o n s sub- Justice, pursuant to Article 177 of the m i t t e d to the C o u r t EEC Treaty, the following questions for a preliminary ruling: 1. Obsevations submitted by Zentrag " 1 . Is Article 1 of Regulation No 964/71 of the Commission of 10 In Zentrag's opinion, it is necessary in May 1971 invalid on the ground that the first place to consider the scope of it infringes Regulation No 802/68 of Article 1 of Regulation No 964/71. That the Council of 27 June 1968? provision merely contains a definition of the slaughter of domestic animals as one of several operations which may 2. Does the processing of meat by determine origin and, as is apparent from boning, trimming, drawing the the recitals in the preamble to the regu- sinews and cutting it into pieces lation, "cutting" comes within the constitute a process determining concept of slaughter only in so far as it origin for the purposes of Article 5 constitutes a "related operation". That is of Regulation No 802/68?" the case only as regards cutting into approximate halves or quarters which is designed to permit or to facilitate further 3. The order making the reference was transportation of the slaughtered animal received at the Court Registry on 25 and further operations on or processes May 1983. affecting it.

In accordance with Article 20 of the That provision does not therefore Protocol on the Statute of the Court of prevent origin from being established by

the processes or operations which follow purposes of resale, without bringing the slaughter of the animal and which about any change in the individual pieces also include cutting it into pieces, an of meat. operation unrelated to slaughter, pro- vided that the general requirements pre- On that basis, it must be affirmed that, scribed by Article 5 of Regulation N o as Regulation No 964/71 provides, only 802/68 are fulfilled. slaughter brings about a substantial qualitative change. However, since that In answering the second question, the is a comparatively simple operation, Court must also take into account the there must bé an additional factor, that is fact that the meat is vacuum-packed. It is to say fattening or rearing. Conversely, it incorrect to state that vacuum-packing must also be possible for an additional, does not affect the essential properties of costly operation following slaughter to the meat. be taken into consideration.

It takes the view that a pro- That regulation is concerned exclusively cess or operation is "substantial" for the with the question which operations purposes of that provision only if the preceding slaughter must have been product resulting therefrom has its own carried out, in addition to slaughter, if properties and a composition of its own the latter is to have the effect of which it did not possess before. Activities conferring origin. affecting the presentation of the product for the purposes of its use, but which do not bring about a significant qualitative 3. Observations submitted by the Com- change in its properties, are not of such a mission nature as to determine the origin of that

It value quite appreciably (by approxi- merely provides that the country in mately 30% according to Zentrag) but which the animals are slaughtered and in that increase in value is attributable which certain related operations such exclusively to the fact that the pres- as evisceration, skinning, cutting and entation of the product is altered for the chilling of the meat are performed may

be regarded as conferring origin only if its origin for the purposes of Article 5 of the animals were fattened for at least Regulation No 802/68. three months or, as the case may be, two months in that country prior to slaughter, since slaughter adds very little to the value of "meat" as a product Those operations can be carried out with (approximately 2 % of the market value expert knowledge alone and do not based on live weight). Regulation N o require the use of any special machines 964/71 is silent on the question whether or implements. Boned meat is, moreover, other meat-processing operations, more not by any means always easier to sell complex than mere slaughter, can confer and is therefore not always "more origin for the purposes of Article 5 of marketable" than meat which has not Regulation No 802/68. been boned since many meat-processing undertakings and butchers prefer to bone the meat themselves, in accordance with their own requirements.

10%. Admittedly, those processes also The answer to the first question referred improve the quality of the product to a to the Court should therefore be that very slight extent, but they do not add to Regulation No 964/71 does not deal its properties unlike the case where a with the question whether the processing processed product such as corned beef or of beef otherwise than by slaughter sausage is manufactured from beef. and related operations preceded by a minimum fattening period determines the origin of the meat.

JUDGMENT OF 23. 2. 1984 — CASE 93/83

to the import duties applicable in that only result from vacuum-packing if at all country. and that it merely consists of making a somewhat longer period of storage possible and reducing weight loss by III — Answers to the questions about 5%. In any event, the increase in p u t by t h e C o u r t value is less than 10%. The Commission repeated that in its In answer to a question which the Court view none of the operations at issue had put to them on the subject, the amounted to an important stage of parties supplied a detailed description of processing. the relevant operations and of the alterations which they bring about in the characteristics and the value of the meat. IV — O r a l p r o c e d u r e In this connection, Zentrag laid par- ticular emphasis on the importance of Zentrag, represented by Hinrich vacuum-packing, which, it said, is a Glashoff, tax consultant, Frankfurt-am- complex and modern process which Main, the Hauptzollamt Bochum, rep- extends the time during which the meat resented by Mr Ambs, Regierungs- will keep and improves the maturing direktor [Permanent Secretary] at the process. The total increase in value Federal Ministry of Food, Agriculture produced by the operations in question and Forestry, and the Commission of the amounts, according to the details given European Communities, represented by by Zentrag, to more than 200% in terms Jörn Sack, a member of its Legal of individual pieces of meat and 17.6% Department, presented oral argument on a comparison between the proceeds and, assisted by experts accompanying of sale of a side of beef and the total them, replied to the questions put to proceeds of the same meat after it has them by the Court at the sitting on been cut into pieces, boned, trimmed and 1 December 1983. vacuum-packed. The Advocate General delivered her The Hauptzollamt stated that any opinion at the sitting on 26 January change in the quality of the meat can 1984.

2 Those questions arose in the course of a dispute between the Zen­ tralgenossenschaft des Fleischergewerbes e.G. (hereinafter referred to as "Zentrag"), Frankfurt-am-Main, and the German customs authority. The dispute relates to the payment of levies applicable, under Article 10 of Regu­ lation (EEC) N o 805/68 of the Council of 17 June 1968 on the common organization of the market in beef and veal (Official Journal, English Special Edition 1968 (I), p. 187), to the importation into the Federal Republic of Germany of a number of consignments of "beef, fresh pieces without bone" which came from Austria. Zentrag claims that these imports should have the benefit, which was refused by the customs authority, of the reduced rate applicable under the specific basic levy fixed for products originating in and coming from Austria, Sweden and Switzerland, in accordance with paragraph (3) of that article and with Commission Regulation N o 611/77 of 18 March 1977 fixing the specific levy in respect of live bovine animals and beef and veal other than frozen (Official Journal 1977, L 77, p. 14).

3 The meat consignments at issue were delivered to Zentrag by an Austrian supplier under cover of Austrian certificates of origin issued by the Graz Chamber of Commerce. The supplier had bought beef quarters in Hungary and then arranged for the boning, drawing of the sinews, trimming, cutting into pieces and vacuum-packing of the meat, while it was still subject to customs control, in a processing plant in Austria. According to Zentrag, since these operations were carried out in Austria, the meat was of Austrian origin; against this, the customs authority maintains that those operations did not alter the Hungarian origin of the meat in question.

" 1 . Is Article 1 of - Regulation (EEC) N o 964/71 of the Commission of 10 May 1971 invalid on the ground that it infringes Regulation (EEC) No 802/68 of the Council of 27 June 1968?

2. Does the processing of meat by boning, trimming, drawing the sinews and cutting into pieces constitute a process determining origin for the purposes of Article 5 of Regulation N o 802/68?"

T h e first q u e s t i o n

6 It is clear from the order making the reference that the Finanzgerichťs first question, relating to the compatibility of Regulation N o 964/71 with the criteria for determining origin laid down by Article 5 of Regulation No 802/68, calls for an examination of the question whether Regulation N o 964/71 has the effect of preventing processing operations carried out on the meat after slaughter, and in particular the preparation of pieces intended for sale to the consumer, from conferring on the meat the origin of the country where those operations take place, and is invalid on those grounds.

7 In this connection, Zentrag, the customs authority and the Commission maintained in their observations before the Court that Regulation N o 964/71 is not intended to deal with the question whether and in what conditions processing operations subsequent to slaughter are of such a nature as to confer upon the meat subjected to those operations the origin of the country where they take place.

8 As is clear from the second and third recitals in the preamble to Regulation No 964/71, the Commission was of the opinion, when it adopted that regu­ lation, that slaughter alone, together with certain related operations, could not be regarded as a substantial process or operation carried out on the meat

JUDGMENT OF 23. 2. 1984 — CASE 93/83

12 According to the customs authority and the Commission, the process in question cannot be described as the manufacture of a new product or as an important stage of manufacture within the meaning of Article 5 of Regu- lation N o 802/68, because it only affects the presentation of the product and does not alter its essential characteristics. The added-value which the process gives to the meat is 10% at most.

1 3 In this connection, it should be borne in mind that, as the Court stated in its judgment of 26 January 1977 in Case 49/76 Gesellschaft für Überseehandel [1977] ECR 41, the last process or operation referred to in Article 5 of the regulation is only "substantial" for the purposes of that provision if the product resulting therefrom has its own properties and a composition of its own, which it did not possess before that process or operation. Activities altering the presentation of a product for the purposes of its use, but which do not bring about a significant qualitative change in its properties, are not of such a nature as to determine the origin of the said product.

Costs

16 The costs incurred by the Commission of the European Communities, which submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

T H E C O U R T (Third Chamber),

in answer to the questions referred to it by the Finanzgericht Düsseldorf by order of 20 April 1983, hereby rules:

1. Regulation (EEC) No 964/71 of the Commission of 10 May 1971 does not have the effect of preventing meat-processing operations following slaughter from conferring upon the meat the origin of the country in which those operations are carried out.